The Innovator’s Manifesto is an impressive work and truly a must-read (or at the very least a must-understand) book for anyone involved in business.
First some backstory - In Clayton Christensen’s two brilliant books, The Innovator’s Dilemma and The Innovator’s Solution, he posited two different kinds of business innovations. Sustaining innovations are those that bring better products to an existing market. Most sustaining innovations are simple, incremental, year-to-year improvements. A useful analogy for a sustaining innovation is the quarter-turn-of-the-screw. With sustaining innovations the odds overwhelmingly favour the incumbents.
A disruptive innovation is different it, “brings to market a product not as good as the products in the current market, and so it cannot be sold to the mainstream customers. But it is simple and it is more affordable.” Disruptive innovations take root in a small niche of the market but eventually reach the mainstream. “I call that a disruptive innovation,” Christensen said, “not because it’s a breakthrough from a technological sense, but instead of sustaining the trajectory of improvement that has been established in a market, it disrupts it and redefines it by bringing to the market something that is simpler.”
While Christensen used the small and obscure pre-PC hard drive market of the ‘80s in his earlier books to make his point, here Raynor uses many more examples. In fact, the author spends quite a bit of time ensuring you know exactly what a disruptive innovation is and what it isn’t. The Internet was a disruptive innovation to newspapers. Toyota was a disruptive innovator with its Toyota Production System of lean manufacturing and process improvement. Southwest Airlines was a disruptor with its low cost carrier strategy. These were innovations that took root in a small niche of the market but eventually reached the mainstream and dominated them.
In the book Raynor, who co-wrote the Innovator’s Solution with Christensen, lays out the case for disruption theory with exacting clarity. He cites a case study showing that MBA students schooled in disruption theory are 50 percent more likely to pick businesses that survived in a business plan competition.
Raynor chronicles Southwest Airlines, going to great rhetorical lengths to prove that the company was in fact a disruptive innovation and not some one-off. In order to give a proper explanation of what a disruptive innovation is let’s dive into how WestJet like Southwest Airlines before it, used a disruptive innovation to succeed.
The Defining Characteristics of Disruptive Innovations
Characteristic The company has a different business model that defines a new area of productivity Test WestJet profitably serves customers that are unattractive to Air Canada even if Air Canada tries to serve them. Think of the plight of Air Canada Express (formerly Air Canada Jazz).
Characteristic The business model expands outward and upward once key technology enables it to do so Test Air Canada has a fleet with several different types of aircraft. WestJet has one type of aircraft, the 737. Southwest Airlines, before WestJet, used earlier model 737s that were not as fuel-efficient and didn’t have sufficient range to travel the continent. Once the next generation 737s became available Southwest (and later WestJet) was able to compete for more demanding market segments without changes to the business model.
Characteristic The business breaks trade-offs that define competition in established markets Test Air Canada’s tradeoffs were simple, business class service and a classic hub and spoke airline model that allowed them to service a large swath of customers. WestJet’s model broke that tradeoff by offering cheap flights and a higher level of customer service.
The book lays out quite clearly why you should familiarize yourself with its concepts. Managers and business people who are trying to grow an existing business need to be able to identify and create opportunities to innovate successfully. If you want to improve your chances of success in an existing business, disruption theory finds that you should guide your own innovation efforts in ways that make you as disruptive to others as possible.
The book lays out the theories predictive powers via some well-researched and well-sourced studies He then clearly lays out a very detailed explanation of disruption theory and then to wrap up the book details the application of this theory. This is the important how-to part of the book and where the real meat is. While Raynor is sometimes pedantic and dry to see the proof in the pudding is exciting stuff. The case studies are where you can really see disruption innovation at work.
While not all manufacturers and businesses are going to be able to apply disruption theory right away it is a useful bit of knowledge to have in the toolbox. Both sustaining innovations (like process improvements) and disruption innovations are necessary to ensure the continued growth and success of your business. However, if you’re looking for homeruns then a disruptive business has the potential to hit it out of the park.